Investing in a buy to let property is an excellent way to put your savings to good use – if you make sure you do the right way. We’ve put this brief guide together to help set you off in the right direction with everything you need to know. Read on to find out about how to make the best of your buy to let investment and help make yourself financially secure.
Find the right location
Location is so important when it comes to buying to let. For example if you buy in an area where rents are cheaper than mortgaged properties, then you are going to face losing money for the foreseeable future. However, should the markets change, then there may be a long-term opportunity for you further on down the line. The location that you choose will also dictate the type of person that you want as a tenant. An area with good schools and facilities might be perfect for a young family, for example. However, somewhere close to a university with plenty of bars and nightclubs might attract more students.
Understand the costs
The costs involved with buy to let can be extensive. Not only do you have to pay for the property – which could include a large deposit and high monthly payments – but you also have to consider maintenance. Also, according to the Simarc Property Management company, you may also have to allow for an annual ground rent payment if you are a leaseholder. There is also the cost of your time to consider. If you have to make visits every other week to fix problems, it will limit your ability to earn money in your regular line of work. Time and money are important things to think about when it comes to investing – and if you suspect you will spend too much of either, then it is wise to look elsewhere.
Most buy to let properties will need some work done to enable you to attract the best possible tenants. Obviously this costs money – and the longer it takes, the more you will be spending. However, a quick rush job is only going to cause you problems later on down the line. It is advisable that you start developing a relationship with local building firms and tradespeople so you know who you can rely on for quality work.
We all like to think that we would only let our properties to the perfect tenant. However, there are always complications. First of all, you have no real idea about a prospective tenant’s lifestyle choices or personality, other than what you pick up on the first brief meeting. Secondly, you may not have a choice. Every day that your investment is empty, you will be paying for it, so it might be necessary to fill the property with the first person that shows an interest. When it gets to this stage, your quality control for tenants may slip – which could lead to a few uncomfortable moments.
Best of luck with your buy to let plans – and please feel free to let us know how you got on.